CFPB Announces Expansion of Unfairness Analysis to Address Discrimination – JD Supra – DC Initiative on Racial Equity
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[co-author: Andre Manuel]

On March 16, the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) announced a significant expansion of its “anti-discrimination efforts to combat discriminatory practices across the board in consumer finance.”1 Under the Dodd-Frank Act, the CFPB’s explicit statutory authority to examine covered institutions for potential discriminatory practices arises primarily in the consumer credit and housing markets under the Equal Credit Opportunity Act (“ECOA”) and Home Mortgage Disclosure Act (“HMDA”). Last week, the agency announced that it will examine institutions for potential discrimination (presumably on the basis of protected characteristics such as race, religion, sex and age) in the offering or provision of consumer financial products or services more broadly. The announcement asserts that such discrimination may constitute an unfair act or practice under the Consumer Financial Protection Act (“CFPA”).

The Bureau’s announcement has potentially far-reaching implications for providers of consumer financial products and services, whether or not they are already subject to oversight under ECOA, HMDA, or other anti-discrimination statutes, such as the Fair Housing Act, enforced by other federal regulators. First, non-credit consumer financial products formerly not covered by fair lending laws will be subject to anti-discrimination risk under the Bureau’s new standard. The position outlined in the revised examination manual is likely to extend beyond supervision to the Bureau’s other regulatory activities, including enforcement. Indeed, the Bureau’s Assistant Directors who oversee its supervision and enforcement offices issued a joint blog post on the day of the Bureau’s announcement discussing the newly announced standard.2 Second, non-bank providers of consumer financial products, including entities not subject to the Bureau’s supervisory authority, may be subject to anti-discrimination compliance obligations enforced by the Bureau for the first time. Third, entities should prepare for uncertainty regarding the precise legal standard the Bureau will employ in applying its new unfair discrimination standard, which may diverge from established anti-discrimination liability standards.

1. Background

The Bureau’s traditional statutory authority for fair lending supervision and enforcement arises from ECOA and HMDA. ECOA prohibits discrimination by creditors against credit applicants.3 Its implementing reg


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